Be on the lookout for Sony (NYSE:SNE) on Main Street America -- at least in affluent cities and towns.
The electronics powerhouse plans to expand its limited foray into specialized retail stores by adding 50 to 60 new locations in the U.S. over the next two or three years. The goal is to obtain customer feedback for product development and increase per-customer sales, according to company leadership.
The strategy follows a path forged by Apple Computer (NASDAQ:AAPL) and imitated, briefly, by Gateway (NYSE:GTW). For Apple, the retail area has been a mixed bag. Sales at its stores zoomed 97% year over year in its most recent quarter to $266 million from $135 million. Unfortunately, the retail segment's operating income for the last quarter was a paltry $5 million, although this was an improvement over the $3 million loss incurred in the year-ago period. In light of Apple's showing, it's not surprising that Gateway abruptly pulled the plug on all its stores.
One area in which retail sites appear to be effective is in grabbing consumers' attention. I know I have trouble not taking a quick look inside Apple stores whenever I happen to walk past one. Nevertheless, opening expensive stores in upscale markets seems like an awfully costly way to market products.
However surprising Sony's retail plan is, it is hard to question the firm's marketing prowess. The company has been especially aggressive (though some of its more ambitious plans fell through) in promoting Spider-Man 2. The fruits of this effort are already evident, even before the film's first weekend in theaters. (It helps that the movie is actually supposed to be very good).
All the same, the idea of investing significant amounts of cash to have a bigger and most likely money-losing retail presence seems strange. After all, this is the same company that announced it is pulling out of the PDA segment, where it controls 13% of the market, presumably because heavy competition keeps profit margins low.
Fool contributor Brian Gorman is a freelance writer living in Chicago, Ill. He does not own shares of any companies mentioned here.
